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HMRC Turns Screws On Self-Assessors

by Robert Lee,, London

01 November 2012

The UK tax authority HM Revenue and Customs (HMRC) took 64% more revenue in the last financial year from tax investigations by taking an increasingly aggressive stance on UK self-assessment personal tax returns, new research has found.

Chartered accountancy firm UHY Hacker Young found that HMRC is cracking down on the UK's taxpayers by targeting smaller amounts on personal tax returns. Revenue received from investigations into personal tax returns in the 2011-2012 tax year rose to GBP440.6m (USD707.3m), compared with the GBP268.8m collected in 2010-2011.

HMRC's aim is to obtain GBP7bn in additional revenue a year by 2014-15, and UHY attributes the pressure to meet this target as the reason behind the more detailed scrutiny of self-assessment returns. In particular, additional focus has been placed on increasing revenues from Capital Gains Tax (CGT) on the sale of buy-to-let property and on the sale of stakes in businesses.

According to Roy Maugham, tax partner at UHY's London office, HMRC will "ratchet up its returns quickly" if it discovers a mistake in CGT calculations. He said that HMRC knows that CGT is an area that it can "pick up big slugs of extra money", where the lump sums involved are higher than for many other forms of taxation.

Maugham added that on the whole HMRC is trying to raise revenue across the board by undertaking increasingly painstaking investigations and is now pursuing smaller infractions. HMRC previously concentrated its resources and manpower on chasing larger amounts of money, but is now taking a more forensic approach to even the most modest amounts of missing tax, Maugham explained.

“As it stands, HMRC isn’t missing any tricks when it comes to collecting this extra revenue. The targets it has been set are extremely high, and HMRC is really focusing all its energy into ensuring it meets them,” Maugham concluded.

TAGS: individuals | capital gains tax (CGT) | compliance | tax | investment | real-estate investment | tax compliance | tax avoidance | accounting | real-estate | United Kingdom | self-employment | revenue statistics

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